Northrop Grumman Corporation (NOC), Textron Inc. (TXT): Aerospace and Defense Companies Battling it Out

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The global Aerospace and Defense, or A&D, Industry is expected to grow at a rate of around 2.5% over the period of 2012-2015 to reach $544.7 billion. The companies in this sector are striving hard to cash in on the underlying growth opportunities, and in order to gain most are entering into joint ventures and signing more contracts. A&D companies have growth potential, and they are adopting distinct strategies to build a stronger presence in the market. Let’s check out how these strategies will work for these companies?

Northrop Grumman Corporation (NYSE:NOC)Northrop Grumman Corporation (NYSE:NOC)Northrop Grumman Corporation (NYSE:NOC)

New contract generating higher growth opportunities

Recently, Northrop Grumman Corporation (NYSE:NOC)’s Scalable Agile Beam Radar, or SABR, was selected by Lockheed Martin for upgrading and modernizing radars on the F-16 fighter aircraft of the U.S. Air Force. This upgraded radar will add unique operational capabilities to the widely used fourth-generation F-16 fighter aircraft. This program falls under Northrop Grumman Corporation (NYSE:NOC)’s Electronic segments sectors. SABR active electronically scanned array, or AESA, is the newest airborne fire control radar, which improves the F-16 aircraft’s attacking efficiency by enabling it to identify and detect targets with high-resolution synthetic-aperture radar, or SAR, maps, and electronic protection. It is expected that by developing this radar, Northrop Grumman Corporation (NYSE:NOC)’s electronic systems segment may generate the revenue of more than $7.13 billion this year from $6.95 last year with year-over-year growth of around 2.6%.

The company is providing the network and integration services under the Distribution Mission Operations Network, or DMON, service contract to the U.S. Air Force. It recently received the contract of $490 million to continue its DMON services for the next five years, which could potentially extend to 2023. DMON allows various aircraft platforms located around the world to operate and train warfighter pilots together in virtual conditions. The company has been supporting war-fighter training for more than ten years, and Northrop Grumman Corporation (NYSE:NOC) innovated it DMON services, making it more powerful, efficient, and affordable.

Last year, the company extended the network area of DMON to additional Air Force platforms and extended capabilities to realize the potential of virtual and cost-effective training. Therefore, it is expected the company may continue to receive extension requests from the U.S. Air Force for its DMON services in the future. Due to the contract, Northrop Grumman Corporation (NYSE:NOC) raised its revenue guidance by around $300 million to $24.3 billion for this year.

Joint venture driving future revenue

In June, Textron Inc. (NYSE:TXT) won the five-year contract worth $6.5 billion from the U.S. Naval Air Systems Command, or NAVAIR, due to the Bell The Boeing Company (NYSE:BA) V-22 program, a 50:50 joint venture between its subsidiary Bell Helicopter and The Boeing Company (NYSE:BA).

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